David Cote Quotes

Three Principles of Short- and Long-Term Performance 1.​Scrub accounting and business practices down to what is real. 2.​Invest in the future, but not excessively. 3.​Grow while keeping fixed costs constant.

The heated public discourse about the frequency of false rape allegations often makes no reference to actual research. When the discourse does make reference to research, it often founders on the stunning variability in research findings on the frequency of false rape reports. A recently published comprehensive review of studies and reports on false rape allegations listed 20 sources whose estimates ranged from 1.5% to 90% (Rumney, 2006). However, when the sources of these estimates are examined carefully it is clear that only a fraction of the reports represent credible studies and that these credible studies indicate far less variability in false reporting rates." Lisak, D., Gardinier, L., Nicksa, S. C., & Cote, A. M. (2010). False allegations of sexual assualt: an analysis of ten years of reported cases. Violence Against Women, 16(12), 1318-1334.

they don’t need to love you. Do your best to address their concerns, be consistent in your messaging, and have faith they’ll come around eventually. If you move seriously to resolve these issues, and if you do it in a smart, disciplined fashion, they’ll eventually notice.

My Dad used to say that if every man just took care of his own family, the world would be a much better place.

Entropy is the rule in organizations, as it is in the physical universe. Over time, all organized systems evolve toward chaos. Unless you pursue change relentlessly, your efforts will eventually wither away.

Finding and Fixing the “Hidden Factory” 1.​Map out your existing process step by step from beginning to end. 2.​Map common workarounds in case of problems. 3.​Optimize your process and involve end users. 4.​Confirm that the new processes are more efficient and improve results for end users.

I had found so far at Honeywell that executives and managers often made presentations far longer than necessary, overwhelming audience members with facts, figures, and commentary in an effort to preempt sharp, critical questioning.

Great leaders, I came to believe, challenge themselves and others to understand their businesses better and rethink them so that they can achieve two seemingly conflicting things at the same time. That same intellectual discipline—that mind-set of rigor and curiosity—allows leaders to master what is arguably the most important conflict of all: attaining strong short-term results while also investing in the future to achieve great long-term results.

The idea that as a leader you can focus on strategy and delegate its implementation to great people is a fallacy. You don’t want to micromanage, and you do need to tailor the amount of oversight you give to the leader in question.2 But time is limited, and faced with urgent priorities, even the most talented people will let difficult, longer-term projects slide. Leaders must get out in the field to confirm that these projects are actually happening. They also must make sure the “machinery” works everyday—that employees have the tools and processes they need to execute their decisions, and further, that they’re working hard to improve these tools and processes.

In my first three years as CEO, we wound up changing out about half of my staff members, replacing them with leaders who bought in strongly to One Honeywell.

In driving for cultural change, it’s a mistake to become overly constrained by your desired culture as you’ve defined it. Are there any other, related behaviors, values, or principles that support high performance than the ones you’ve formally adopted? If so, don’t hesitate to push these as well.

When institutionalizing the culture, don’t just graft it blithely onto existing processes or practices. Go deeper and question whether those processes or practices themselves need improvement.

Conventional wisdom in the HR community held that bosses had to work with underperformers, sitting with them and providing coaching and oversight. As we saw it, that was precisely the wrong thing for bosses to do. Helping the single underperformer on a team of ten get back on track sucks up a lot of valuable managerial time. Leaders are much better off working with the other nine to help them notch wins for the organization, while also attending to customers and operational matters. Underperforming leaders (and lower-level managers and employees as well) needed to take responsibility for fixing their own performance. If they didn’t change within a fairly quick time period, they’d face the consequences. That might sound cold and uncompromising, but it really isn’t—it’s honoring and supporting the vast majority of people who are working hard and performing.

Overall, the handbook focused us on trying to disprove our assumptions about a business and thus avoid falling into the trap of confirmation bias.

had been impressed with a software development technique called CMMI (Capability Maturity Model Integrated). CMMI ranked how mature software development processes at an organization were on a 1 to 5 scale, with 5 being the best. A level 1 development process was “unpredictable, poorly controlled, and reactive,” while a level 5 process was well organized, well understood, and focused on continuous improvement.3 With a level 5 process, you had a robust, documented development procedure in place that minimized errors and enabled the entire organization to learn from errors so as not to repeat them.

If you have a great strategy but overpay for a company, someone else’s shareholders will see the benefits of your strategy, not yours.

In framing our new M&A process, we resolved to maintain a clear separation between our dealmakers and our deal-negotiators. After a business leader had cultivated a company for acquisition, he or she would turn the deal over to our corporate M&A department, which would negotiate the contract based on the results for the acquired company that our business unit would commit to delivering. Sometimes our business units disagreed with how our corporate people were handling a deal—our business leaders just wanted it done, and they had developed personal relationships with the sellers. Our corporate M&A team negotiated more dispassionately, assuring that we really didn’t overpay, even if it meant getting tough and walking away. In deal after deal, that made all the difference.

As you pursue long-term growth, don’t limit yourself to the specific initiatives discussed here. Stay alert for new growth areas.

Today, almost half of our engineers company-wide are developing software—a massive change from years past.

To Never Overpay . . . •​Develop a standardized valuation model of your own. •​Use your own estimates of sales and margins. •​Factor in anticipated cost savings, but not sales synergies. •​Value acquisitions conservatively and walk away if the deal becomes too rich. •​Don’t let the dealmakers negotiate the terms. •​Exercise final oversight, exploring the downsides and scuttling the deal if you risk overpaying. •​Maintain a great pipeline of potential deals so that no single deal seems like a must-have.

Three Questions to Ask of Each Business in Your Portfolio 1.​Is it in a good industry? 2.​Does it occupy a great position in that industry? 3.​Does it deliver a strong ROI?

I had felt compelled to write this letter because we had emerged from the Great Recession of 2008 in great shape, outpacing our peers and also Honeywell’s historical performance during recessions. While the experience was still fresh, I wanted to capture my reflections on how we had done it, in the hopes that my successors would have an easier time dealing with similar situations in the future and wouldn’t have to waste time learning what we’d learned. If you haven’t written such postmortem analyses (or white papers, as we called them) for your organization, I strongly suggest it. As we saw in chapter 1, intellectual rigor is vital for organizations seeking to perform well today and tomorrow, and leaders are uniquely positioned to establish and maintain that rigor.

Leaders often panic when recessions strike. They go into survival mode, managing quarter-to-quarter and shoring up their numbers by cutting back on the long-term growth projects we’ve described in previous pages. Such actions might please investors in the moment, but they undo hard-won progress the organization has made. This is a big mistake, and one thankfully we avoided. By looking for creative solutions to the financial challenges we faced during the Great Recession, we maintained our investments while still delivering results that outdid our competitors’ performance.

Bob Rubin’s book In an Uncertain World. Rubin had argued that many outcomes are possible in a given situation, and you have to anticipate and prepare for eventualities that seem unlikely but that could prove extremely damaging should they materialize

shareholders will only fund the significant investments companies must make in R&D, process improvement, and culture if they see adequate short-term returns on their investments. It’s incumbent on leaders to pursue growth and deliver quarterly results.

Demand that your people pursue two seemingly conflicting things at the same time. Make it your mission to understand the nuances of your businesses so that you can shape and guide your teams’ intellectual inquiry. Allocate your time thoughtfully; don’t become a victim of your calendar. Carve out time to read, research, and think. Turn your meetings into vigorous, instructive debates.

Understand the significance of mind-set and culture. If the mind-set doesn’t change, operations won’t change either.

people sometimes use teamwork as an excuse for suppressing dissenting opinions.

We made performance reviews more substantive and serious by changing them to include a measure on each of the Twelve Behaviors, and by requiring that each manager secure his or her boss’s approval of each appraisal (see chapter 5

let’s discuss the purpose of this presentation. If we’re here for the team to put on a show for me, then you’re right, I should sit back and listen. But if the point is for me to learn about your business and its issues, then we need to conduct the presentation in a way that facilitates my learning. I need to ask questions right away, get the answers I need, and then move on.

Instead of finding new ways to support innovation and investment while achieving short-term goals, they fall back on the same old strategies, policies, and procedures, relying on accounting sleight-of-hand to make it all work.

In challenging other leaders intellectually, I strove specifically to push them beyond the incrementalism that usually exists inside organizations—the tendency to consider the short-term implications of a decision exclusively and to ignore the long term.

While reading a book about the construction of the Panama Canal, I came across an anecdote about the project’s chief engineer, whose math teacher used to say, “If you have five minutes to solve a problem, use the first three to figure out how you’re going to do it.

Simplicity and concision are tough. The French philosopher Blaise Pascal famously noted that he’d written a long letter, having lacked the time required to write a shorter one.2 As I believe, if you can’t convey a thought clearly and in a few words, then your comprehension of it is probably lacking.

Delegation and trust are of course vital—you can’t do everything yourself, and you shouldn’t try. That said, you don’t want delegation to verge into a total abdication of authority on your part. You must verify that employees and the organization are actually executing as they are supposed to.

designate two or three days each month as “X” days, during which they wouldn’t schedule any meetings. I’d spend some of those days alone thinking about our businesses.

On my regularly scheduled days, I made sure to free up as much time and mind-space as I could for thinking. If you haven’t gotten serious about tightening up your calendar, now is the time to start. Do you really need all those meetings? Are there ways to minimize the length of essential meetings and still make progress?

One of my favorite techniques is to require that teams provide me with a summary page at the beginning of the meeting or beforehand so that I could get the gist of the issue up front as well as the team’s recommendations rather than waiting for the story to unfold.

As I like to say, it’s important to be right at the end of a meeting, not at the beginning.

Too many leaders expect their people to adapt to their particular leadership style. If you want the best performance, look beyond your style and provide feedback tailored to the individual.

Criticizing privately might be appropriate in certain, sensitive cases, but in general both criticism and praise should be public. Your people have to understand that certain behaviors or performance are unacceptable. Otherwise they’ll wonder why the organization allows it. When leaders share both criticism and praise publicly, team members learn about the high performance culture you’re striving to create.

When it came to monetary compensation, we didn’t hesitate to pay our leaders above market.

To attract and retain the very best, we also paid the best people what they would command at other companies for a bigger job. Why wait until someone else tried to steal them away before paying them what the market said they were worth?

My interviews also imparted a sense to the interviewees of how significant the new job was to the company. When the CEO and global HR leader each take an hour to talk to you about a job you’re interviewing for, that says something

more leaders equals more bureaucracy. Leaders don’t just lead—they create work for other people, in the form of meetings, sign-offs, projects, procedures, priorities, and so on, especially if they’re good leaders. Others in the organization then spend more of their time responding to these leaders and less time leading or managing their own team members. Each leader has their own staff—adding yet more cost and complexity to the organization.

When you ask leaders to do more, and they deliver over both the short and long term, leading to wins for shareholders and customers, then those leaders deserve higher than average compensation.

To Build a Robust Pipeline . . . •​Don’t wait for bankers to knock on your door with potential deals. Instead, scour the market proactively. •​Seek out businesses that have great positions in good, high-growth industries. •​Look for bolt-on acquisitions as well as companies in good industries adjacent to yours. •​Not all perceived adjacencies are the same. If the adjacency is too far removed from your existing business, you will lose your shirt. •​Make identifying targets a day-to-day priority. •​Be patient. Nurture long-term relationships with potential acquisitions.

We created a corporate handbook that each business unit had to follow when performing due diligence on a potential acquisition.

As you tighten up R&D, you’ll be in a stronger position to grow sales even more by expanding geographically. When I joined Honeywell, three-quarters of global GDP occurred outside of the United States, but only 40 percent of our sales originated there. That thirty-five-point gap spelled opportunity.

we started to work on new digital business models—like enabling and reselling Wi-Fi time on aircraft, and our Sentience platform for developing new software products

We also changed our recruiting practices to improve our digital talent pool. Formerly, we had sought out digital talent from the best, name-brand colleges and universities. Now we focused on attracting members of a small subset of elite programmers who were capable of producing ten times the output of the typical programmer. To attract these premier programmers, or “multipliers” as we called them, we began evaluating potential hires on specific skills related to programming, collaboration, and teamwork, observing their actual behavior rather than just relying on their academic record. We took a similar approach to hiring data scientists as well. Our efforts in this area helped us significantly up our game as we developed software as a business and incorporated it into more of our existing products.

one of the leader’s most valuable but least valued contributions is avoiding trouble, not addressing it once it’s occurred).

Work, too, on the quality of your own thinking. Carve out the time you need for blue book sessions, and make use of the other techniques I’ve described. Challenge yourself to reflect on your business or organization. And challenge yourself to think independently. Remember, smart leaders abound, but leaders who can think independently are rare.

You don’t need to be a twit in articulating these expectations, and you shouldn’t ask people to do the truly impossible. But you do need to request the seemingly impossible, putting it to them in a kindly way and even with a sense of humor. It is possible to overdo it, as I have on occasion. On balance, though, organizations, people, and leaders would do well to be much more demanding of themselves than they are. Whatever you do, stay hungry. Investors often asked us what would cause us to miss our numbers, thinking I would name some industry or economic issue, but I always gave the same answer: “If we ever lose our hunger.” That hunger starts with the leader.

Show some courage—be the leader you want to be. Without legacy issues hanging over your head, you’ll be able to focus on building up your business to compete better and win, and you’ll channel the money you save by resolving issues proactively back into the business. You won’t reap all of the financial benefits—your successors will inherit them as well. What you will reap is a legacy; a reputation as a strong, transformational leader.

Most companies have succession plans for their leadership ranks, but it devolves into a rote exercise, and the organization lacks a clear sense of who will fill key roles in case of departure. It’s another instance of what I call “compliance with words rather than compliance with intent.

If you want to perform well over both the short and long term, pay close attention to executive leadership in general. As much as you might invest in areas like culture, process transformation, and M&A, you’ll only make progress if you have talented senior leaders who are both committed to the company’s strategies and capable of executing on them. Having the right number of those leaders matters too.

When both introducing and sustaining change, leadership matters. The organization needs to see that you, personally, are taking this seriously. As we rolled out HOS, I talked about its importance for our business at every opportunity. I held regular meetings to make sure we were actually implementing it and that we were getting the results—something I didn’t do for Six Sigma, and a reason it underdelivered.

An organization that is adept at constantly evolving usually won’t need to take enormous risks to bring about revolutionary change, because it’ll have been changing all along.

Not only did I spend time in advance of meetings generating some key questions for teams,

I’d also designate twelve additional days as “growth days,” holding intensive sessions with leadership teams to help them think through various growth or operations initiatives.

In public, you have to convey confidence in the moves you’ve made because teams and organizations don’t handle uncertainty very well. But that doesn’t mean you can’t question your decisions in private. It’s vital to do that. It’s also critical to avoid falling prey to your own confirmation bias. We all tend to pay more attention to evidence that supports what we already think and discount data that conflicts with it. The remedy is to systematically seek out evidence that negates your hypotheses or beliefs.

Too often people tend to think about what they’ll say next when someone else is speaking. I developed a practice of listening all the way through and waiting three seconds to respond—it’s amazing how that small change allows you to really hear what someone is saying . . . or not saying.

The Five Initiatives 1.​Growth (via customer service, globalization, and technology) 2.​Productivity (went hand-in-hand with growth) 3.​Cash (improve working capital and have high-quality earnings) 4.​People (keep the best talent, organized the right way and motivated) 5.​Organizational enablers (including Six Sigma, Honeywell Operating System, and Functional Transformation)

The Twelve Behaviors 1.​Focus on customers and growth (serve customers well and aggressively pursue growth). 2.​Lead impactfully (think like a leader and serve as a role model). 3.​Get results (consistently meet any commitments that you make). 4.​Make people better (encourage excellence in peers, subordinates, and/or managers). 5.​Champion change (drive continuous improvement in our operations). 6.​Foster teamwork and diversity (define success in terms of the entire team). 7.​Adopt a global mind-set (view the business from all relevant perspectives, and see the world in terms of integrated value chains). 8.​Take risks intelligently (recognize that we must take greater but smarter risks to generate better returns). 9.​Be self-aware (recognize your behavior and how it affects those around you). 10.​Communicate effectively (provide information to others in a timely, concise, and thoughtful way). 11.​Think in an integrative fashion (make more holistic decisions beyond your own bailiwick by applying intuition, experience, and judgment to the available data). 12.​Develop technical or functional excellence (be capable and effective in your particular area of expertise).

In addition to holding MRRs for individual businesses, I gathered my staff together each year to do a single, comprehensive MRR covering all the top management in the company across businesses and disciplines—around four hundred people in total. We discussed each of these leaders one by one. During this conversation, our functional leaders had an opportunity to comment on the performance of leaders in the business units, while our business leaders could comment on how well executives within the functional organizations were doing. This exchange broke down the silos between businesses and corporate functions that usually exist inside organizations, reinforcing the idea that we all needed to work together and were all responsible to one another. No longer could a functional leader say, “Just leave me alone to control my own organization.” Others across the organization would have a chance to weigh in—and they would take it.

We had also created 2,500 401(k) millionaires because employees had invested in Honeywell, with 95 percent of them below the executive level and the lowest compensated earning an annual salary of only $43,000.

Just as you’re pushing for more efficiency throughout the organization via process change, you can also keep your organization increasingly slender and nimble as you grow by maintaining a leadership corps that is relatively small and stable but that punches far above its weight.

Accounting is your primary information system for making decisions, so if that information is bad, your decisions will be bad too.

We had to scrub our books and practices so that they reflected the reality of our underlying businesses. We also had to shake our executives out of their blinding fixation on quarterly results. Only then could we make planning decisions that supported long-term growth.

One of my top priorities as CEO was to eradicate the BS and reinvent planning. Every year, starting in 2003, I required teams presenting to me to write a three-to-four-page executive summary that highlighted the basic plan. That document would allow us to cut through the pages of obfuscating charts and bullet points.

we made a practice of publicizing internally the top ten and bottom ten performers on HOS. Leaders and teams liked placing in the top ten, but they absolutely detested being publicly identified as a bottom-ten performer. This tactic helped generate a sense of urgency around HOS, raising performance across the entire organization. In fact, I recommend using this tactic whenever you’re trying to change anything in an organization.

Understand the significance of mind-set and culture. If the mind-set doesn’t change, operations won’t change either. In particular, be sure to get people past the mentality of “I have to do my job and this too?

process change is for teams of any size and doesn’t have to roll out at the organizational level. Any group of operators can improve short- and long-term performance by investing in process improvement. If you lack the budget to develop a full-blown operating system for your team or organization, then inventory the major processes that define your work, and focus people on constantly reviewing these processes and adjusting them so that they work more efficiently and effectively. Recognizing that most processes reach across other functions, ensure that you understand the process from one end to the other.

It’s the habit of process change—the undertaking of numerous, sustained changes over time—that counts. So often leaders try to change a business overnight by taking a single, bold action. Process improvement is less dramatic and glamorous than that. It’s a change in mind-set and operational norms that takes months or even years to establish, and that yields incremental, accumulated gains years into the future (remember that the compounding effect of 3 percent versus 1 percent annual productivity is huge over time). Process improvement is also about yielding some of your authority as a leader and empowering others closest to the action to improve the real work, incrementally, day after day. Their insights, judgments, and decisions large and small, compounded over a period of years, move the organization forward.

After hearing our presentation, audience members would raise their hands and ask, “So, what was the single big thing you did to achieve these great results?” “Well,” I said, “there was no single best practice. It was a mind-set of intellectual rigor we had adopted that made the difference. It’s this mind-set that you should be striving to replicate in your own organization.

My first and most enduring challenge as CEO was to dramatically improve the quality of both our individual thinking and our group discussions.

leadership boils down to three distinct tasks. First, leaders must know how to mobilize a large group of people. Second, they must pick the right direction toward which their team or organization should move. And third, they must get the entire team or organization moving in that direction to execute against that designated goal.

In truth, mobilizing people is only about 5 percent of the leader’s job. The best leaders dedicate almost all their time to the latter two elements: making great decisions and executing consistently with those decisions.

Listening closely to their answers, I’d follow up with still more queries, and make it clear when I wasn’t satisfied. Was I aggressive, demanding, maybe even a little (or more than a little) annoying? Absolutely. But, as the old saying goes, progress occurs because of the irrational demands of general management. I firmly believe that. Leaders must be demanding of their people, otherwise they’ll achieve only marginal results. People and organizations are capable of far more than they think possible.

Recognizing the limitations of our existing policy, we changed it to a so-called sunshine policy, allowing employees to accept a gift as long as they disclosed it to their boss. The message I wanted to send was that we expected our buyers to use their own judgment and not just adhere mindlessly to a given rule.

Over the next six months, we discovered the company had been pursuing deals in an ad hoc, opportunistic way, struggling in four key areas: identifying which companies to acquire, performing due diligence on these companies, calculating their value, and integrating acquisitions into our business. Taking stock of our deficits led us to a powerful, four-step model for pursuing M&A,

We never minded paying a fair price, but overpaying was anathema to us—and it should be to you.

While at General Electric, I’d noticed firsthand what a big difference it made to be in a good industry. When I ran General Electric’s major appliance business, we had a great position but were in a crummy, highly competitive, low-growth industry. No matter how hard we worked, we stood little chance of excelling—the pressure on prices was just too intense. It was far easier, I found, to make progress with a business that occupied a bad position in a good industry.

metrics often foster compliance with words rather than with intent.

In addition to improving R&D and engineering processes, we pushed hard for our business leaders to treat R&D more strategically. Our individual business units used to decide how much to spend on R&D based on previous budgets and what they thought their proper “share” of available money was, regardless of the impact on current and future projects. We centralized R&D budgeting at the business level, analyzing potential projects and channeling more funds to those we thought would yield the biggest business impact. In our Aerospace business, we also began choosing new projects in ways that would balance long- and short-term growth. Most new product development had entailed what we called “long-cycle” projects. We’d invest in designing a revolutionary new cockpit design, but it might be six to eight years before the project was finished and sales started coming in. Beginning around 2005, we balanced these kinds of projects with new, “short-cycle” ones—products that customers might purchase within months, not years (incremental enhancements to existing aircraft, for instance, rather than entirely new platforms for new aircrafts). Then we started adding the salespeople to support it, giving it an even bigger boost in 2010. Together, the combination of short- and long-cycle projects would allow us to realize steadier, more predictable growth. Over the years, our shorter-cycle products have grown, and today they are a highly profitable, $1 billion business.

As we reasoned, if our Chinese operations couldn’t beat their local competitors in China, how would we beat them when these local players eventually matured and expanded to developed markets? We started hiring talented Chinese locals for leadership positions, rather than bringing in expats, and developing more local sourcing for our products. Whereas companies tend to take a big brother approach, with corporate or business headquarters dictating solutions and reserving the right to sign off on projects, we gave our teams in China more autonomy and control as they became more capable. Our strategy of locating R&D facilities in developing countries helped us as well, not just because we could squeeze more value out of our R&D spending, but because we built up local expertise capable of designing products with features and specifications that local consumers wanted and that compared well with the offerings of local competitors.

Although I’ve described several avenues to growth, companies can’t pursue them all with the same level of intensity at any given time. It’s important to prioritize. As you start to invest in growth initiatives, take stock of your company and its strengths and weaknesses, identifying your greatest growth opportunities. Perhaps your flow of new products is already great and so is your customer service, but you don’t have much of a business in a particular country you think could be big for you. Start there, and as I’ve suggested, make a targeted effort. Of course, that requires patience. To return to one of my favorite metaphors, you can till the soil and plant seeds, but then you have to water the plants and care for them over a full season and sometimes several seasons as they grow—no shortcuts.

To Bring Acquisitions into the Fold . . . •​Put integration plans in place before the deal closes, covering management, metrics, and other relevant topics. •​Personally review and approve the plan. •​Tighten up the executional details. •​Put dedicated, full-time integration teams in place, and assemble these teams early. •​Make changes and communicate them immediately to shape the mind-set. •​Stay alert for processes in acquired companies that you like, and introduce them as innovations into your own company. •​Personally perform regular follow-up to ensure that the acquisition really is performing even better than predicted by the valuation model.

Regarding a prospective company’s position in its industry, think hard about whether you might roll up multiple players in a fragmented industry to create a juggernaut. When we entered the gas detection business, there were no big players, but over an eight-year period we were able to acquire several companies, roll them up into a single Honeywell business, and become number one in the industry.

As the decision-maker in your organization, you must become intimately engaged with leadership development, hiring, and firing.

In 2006, we created a special restricted stock units (RSUs) award program for about sixty of our key lower-level executives. We would select these sixty people each year to receive awards representing between 50 and 120 percent of their respective salaries. Once a leader received this award, he or she couldn’t receive it again for three years, allowing us to touch almost two hundred high-potential, lower-level leaders during that period. Each August I called every recipient to discuss the reward, what they had done to merit it, and what the award represented. That took a fair amount of time, but it was worth it. When these up-and-coming leaders received a call from me, they sometimes thought it was a practical joke. In an organization of over 100,000 people, why was the CEO calling them? Personalizing the award left a positive impression, contributing to the significantly higher retention rates we saw among these executives as compared with the rest of their cohort.

coaching and teaching their reports, eliminating the usual executive coaching and MBA programs that companies offer. That occasioned a fair share of grumbling, but it helped that leaders throughout the organization saw me personally reviewing my own staff’s performance, teaching in our training programs, and interviewing candidates for leadership jobs. By becoming more involved, you’ll send the message that leadership truly matters to your success, and that you personally value it.

You never asked!” So many companies struggle with R&D because technology and marketing folks don’t communicate. This was certainly the case at Honeywell. To address the problem, we mandated that technologists and marketers collaborate closely on R&D projects from the very beginning. We also created a company-wide, annual event, our Tech Symposium, that convened hundreds of technologists and marketing executives from around the world to collaborate and network.

we also began an initiative called Velocity Product Development (VPD) that reimagined virtually every part of our development process with the goal of increasing sales. Working with our engineers and marketers, we analyzed the flow of projects through our system, identifying and fixing blockages with an eye toward improving speed. We took apart our development process step by step, improving everything about it—bringing marketing and engineering together from the very beginning, improving how usable our product designs were and how easy they were for our plants to manufacture, implementing rapid prototyping of our designs, and enhancing how we launched new products. We reduced the number of sign-offs new design changes required as they moved through the system, improved software development and testing, and enhanced our use of electronic design tools.

Joseph L. Bower’s The CEO Within, which argued for choosing leaders inside the company to serve as CEO. According to Bower, you wanted a special kind of insider: someone who intimately understood the company and its operations, but who could also maintain a sense of distance and understand what about the company needed to change—an outsider’s perspective from someone on the inside.

We decided to boil our list down to just a few key criteria around which we could easily evaluate candidates. We settled on six: •​An intense desire to win: We didn’t want a new CEO who was adept at explaining why something didn’t happen, but rather someone who could figure out how to win even if unanticipated problems cropped up. •​Intelligence: We wanted someone smart and analytical who could avoid problems before they arose. •​The ability to think independently: Fad surfers need not apply. •​Courage: My successor had to be capable of making bold decisions, while also checking afterward to verify that these decisions were correct. •​Curiosity: We needed a CEO who could stay fresh over time by exposing him or herself to novel ideas—someone who was self-aware and dedicated to learning. •​An ability to motivate and build a strong culture: Our next CEO had to be able to mobilize the company behind the strategy, hiring great people and motivating them.

I asked our business leaders in the depths of the recession to begin working with their suppliers to prepare for the recovery. This seemed impossible to leaders at the time, since many economists and some of my staff were predicting that we’d see an L-shaped recovery—one that was essentially nonexistent. Our sales, according to this view, would never rebound to their prerecession levels. I insisted that recovery would come, just as it always had in the past. And when it did, our short-cycle businesses had to make sure they were first in line for supplies. Our leaders began these conversations, working with suppliers up front to lock in first priority over our competitors when the recovery came. This represented independent thinking on our part—our competitors weren’t doing this. We also took the opportunity to negotiate better payment terms, price reductions, and long-term deals, which were all easier to obtain during a recession. As a result of this effort, we got a big lift as the economy improved, outpacing our competitors in our sales growth, to the delight of our investors.

Understanding the important role played by leaders, we made sure, as I’ve noted, to keep our annual senior leadership meeting intact, even as we were cutting labor costs. The event wasn’t as nice as in previous years, but we needed it so that we could convey to leaders our general thinking about continuing to serve customers, protecting our talent base, and so on. We also needed to acknowledge how bad the recession was and reinforce that this wasn’t permanent—good times would return.

A fourth way to take control of the downturn is to maximize the cash available to you. Cash is always a good friend to have, especially during the tough times.